After studying this chapter you should be able to:
The need for a system by which man might keep a record of his business transactions with his fellowmen was felt early in the history of civilization. Many and varied methods were used to record the transactions. But bookkeeping had its beginning at a comparatively recent date and it has passed through many phases since its institution. With the development of commerce it has attained a position of great importance and today the whole fabric of modern commerce rests on bookkeeping. The main objects of bookkeeping can be said to be the following:
It must provide a permanent and systematic record of all business transaction
The periodical results as to profit or loss should be readily and accurately ascertainable.
To enable financial data to be supplied for management of the business
The entries and narrations should clearly show the nature and effect of each transaction and the combined result of all taken together
Definition and Explanation of Bookkeeping:
The word book or books mean books of accounts and keeping implies maintaining in proper form and order. Thus bookkeeping may be defined as the art of recording business transactions in books in a regular and systematic manner. Click here to read full article.
Before attempting to learn the art or science of bookkeeping it will be better to clarify some of the terms that will have to be used again and again. Click here.
Double Entry System of Bookkeeping:
The double entry system of bookkeeping owes its origin to an Italian merchant named Lucas Pacioli who wrote the first book on double entry bookkeeping entitled “Decomputis etc Scripturis”. Click here to read full article.
Single Entry Vs Double Entry System of Bookkeeping:
Single entry system of bookkeeping which does not follow double entry system and as such, does not record or give effect to the two fold aspect of each and every transaction. Under this system of book keeping, generally a cash book and books to record personal accounts are only maintained. Click here to read full article.
Definition and Explanation of Accounting:
Accounting is defined as “the art of recording, classifying and summarizing in terms of money transactions and events of a financial character and interpreting the results thereof.” Click here to read full article.
Accounting has three main forms of branches, viz, financial accounting, cost accounting, and management accounting. These forms of accounting have been developed to serve different types of objectives. Click here to read full article.
The primary function of accounting is to keep a systematic record of financial transaction – journalisation, posting and preparation of final statements. Click here to read full article.
Parties Interested in Accounting Information:
There are a number of parties who are interested in the accounting information relating to business. Accounting is the language employed to communicate financial information of a concern to such parties. Click here to read full article.
Systems of Accounting – Cash System of Accounting and Accrual System of Accounting:
There are basically two systems of accounting Cash System of Accounting and Accrual System of Accounting Click here to red full article.
Bookkeeping Vs. Accounting/Difference Between Bookkeeping and Accounting:
There is some confusion over the difference between bookkeeping and accounting. This is due to the fact that two are related and there is no universal accepted line of demarcation between them. Click here to read full article.
Accounting cycle refers to a complete sequence of accounting procedures which are required to be repeated in same order during each accounting period. Click here to read full article.